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Will Mumbai Attacks Impact Outsourcing? Print E-mail
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Tuesday, 02 December 2008

By Laton McCartney


The 9/11 attacks, you may remember, triggered a surge of outsourcing as many banks, investment houses and insurance companies moved their backoffice operations from lower Manhattan to India.


Now, in the wake of what some in Mumbai are calling India's 9/11, the question is will that surge reverse itself, sending software development, business process outsourcing (BPO), and outsourcing back to U.S. shores, or perhaps to China?


Of course, much of the outsourced IT and BPO work in India is centered in Bangalore, Chennai, Delhi National Capital Region and Hyderabad, but there is substantial activity in Mumbai as well.


Bank of America has two outsourcing units in Mumbai. Giant consultancy Accenture has one of its global outsourcing and BPO delivery centers there. Three offices of Tata Consultancy Services (TCS) are located in Mumbai. BPO vendor Firstsource Solutions Ltd., which counts a number of major U.S. healthcare companies among its clients, is headquartered in the city of 18 million. Software service company Infoton, whose clients include HSBC Bank Ltd. Citigroup Global Markets India Pvt Ltd and Ernst & Young, also make it their headquarters.


Most of these companies operate in Mumbai suburbs far from where the attacks which targeted U.S. and British citizens occurred. As a result, the attacks have had little impact, they claim. As an example, on the first day of the terrorist assault, about 80 per cent of the employees of mid-tier company Hexaware Technologies turned up for work in the morning shift. "During the course of the day, this figure improved as employees kept coming in. Hence, none of our delivery operations were impacted," a Hexaware spokesperson told reporters.


Omnitech Infosolutions, which has its corporate headquarters in Mumbai, says its operations were not directly affected but those of some of its customers were. "We have various customers in and around downtown (Mumbai) to whom we provide IT technology services," Managing Director Atul Hemani told CIOZone by email. "Some of the clients avail our services onsite and many of them could not operate for a couple of days. Fortunately, all our clients, consultants and engineers are safe."


In a statement released to CIOZone, Tata Consultancy Services noted: "Almost all of the attacks took place in the South Mumbai area. Our assessment indicates that all TCS employees working out of our South Mumbai offices are safe. At present, all our business operations in South Mumbai and throughout Mumbai have commenced as usual, and are functioning normally. No customer projects were impacted by these events. TCS has very well established business continuity plans in place should the need ever arise to implement them."


NASSCOM, the global IT services, software developer and outsourcing trade association, has also put out a statement stressing that the attacks will not have a negative impact on business. "We will not bow down to terror. As an industry that is international and services customers across the globe, we continue our operations, uninterrupted, from centers across India and even Mumbai. Increased precautions are being undertaken to ensure the safety and security of our employees, facilities and visitors."


So it's back to business as usual, at least for now. The real test will come if tensions between India and Pakistan escalate.





Comments (8)
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1. 12-04-2008 12:37
 
It is unlikely that one such terrorist activity will affect the confidence of US and European companies to do business in India. The work load is already affected by about average 20% due to financial crisis in US.
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2. 12-04-2008 13:43
 
I believe that it will have short term effects, but as they put the act together in terms of coordinated level in terms of security, it will diminish. 
 
As they say, only time will heal this wound. 
 
JJ
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3. 12-04-2008 15:07
 
No, Mumbai Attacks will not Impact Outsourcing? This is one of those kinds of incidents which makes the country people more united. They understand that terrorists will always try and weaken us by doing all kinds of misdeeds like these. And, what more will please these terrorists than to see that Indians get shocked and become so weak as to not to go to work. Indians will always be the first one to stand united and strong when such instances take place and have all kinds of back-ups to be as timely as ever in completion of their work and commitments to the world.
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4. 12-07-2008 10:25
 
I dont think an event of this nature is going to make much a difference as far as the outsourcing industry is concerned. There are events of this nature worldwide; are we going to stop business, due to such events, I do not believe so. If such were the case, I do not believe we/businesses are safe in any region these days. 
 
I think the business value still holds good; i.e. technically savvy labor force at lower salaries; the ROI on this is still valid and until it does not make business sense to do so, it will continue. 
 
Industries such as tourism and associated complimentary one\'s such as hospitality will certainly take a hit, however, the consumer base for that is the general public, not the business world. This has no bearing on the business sense for outsourcing for now; until the cost differential no longer does.
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5. 12-08-2008 05:01
 
There is unlikely to be any knee-jerk reaction. However, a couple of key factors I believe will influence long-term plans. Cost is not the only factor in executive decision-making, risk management is also an important one. Stakeholder management is another. 
 
Security effectiveness is a critical factor - especially since this time the terrorists were specifically targeting US and British nationals.  
 
The pressure to create local jobs is another. If the governments are providing such big bailouts, they also want to see local job creation.
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6. 12-10-2008 16:48
 
First of all, the whole idea that offshoring was caused by the 9/11 incidents is rediculous. Offshoring was almost totally based on financial decisions and very, very, litte on terrorism based causes. 
 
For the same reason, it is unlikely that that a move back to the US would be based on the recent terrorism. IF (and I say IF) there was a movement back to the US it would be more about percieved or real customer service and/or re-evaluated financial considerations. 
 
Corporations are mostly past the idiocy of culture/race being reasons to abandon offshoring and are now more concerned about the percieved timing (i.e. hour differences), coordination (escalation to technical centers), and general customer disatisfaction for more business reasons. 
 
Don't give terrorists any credit for their misguided actions than they deserve, and they deserve NOTHING BUT CONTEMP AND CONDEMNATION!!! 
 
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7. 01-29-2009 18:26
 
We conducted a formal survey of companies doing business in India within 24 hours of the Mumbai attack. Exactly half said that they would remain. Of those who said they wouldn't they were uncertain what they would plan to do (fundamentally because of transitioning/retrosourcing impact). What is interesting is that relative safety in China is high because of their intolerance for terrorist activities. IPR & language are challenges that are presently being addressed.
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8. 02-19-2009 09:19
 
In speaking with a vendor who operates in the Mumbai area (although admittedly not directly in the impacted area)and a contact with offshoring operations in Mumbai, it seemed to be BAU after the attack. While I think it's necessary for the government to show progress in clamping down on the Pakistan challenges to restore confidence, I don't think the attacks themselves are going to be the reason people leave Mumbai for outsourcing.
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Marilyn Law

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